The Welfare Effects of Rising Imported Food Prices in Iran

Abstract

Food products account for a significant amount of the Iranian imports. Despite the rising prices of food products over the last two decades, their imports have been increasing too. In this study import demand of the main imported food products is empirically analyzed using Quadratic AIDS. Welfare impacts are measured using compensated variation. The results indicate that all products, except tea and cheese are own price inelastic. In general, price response of food imports is found low. Rising prices of the products as high as their trend over the last two decades has resulted in an annual welfare loss of 2.2 percent.